Volume 2 Number 3

 

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Title Tips by Tute


Volume 2, Number 3


Dear Tute:

During a recent title examination, I discovered an unusual situation, and was wondering how to write it up on my report. The title order called for the property to be sold by John Smith. The property had been vested in a John and Mary Smith, husband and wife, as tenants by the entireties by a deed in the 1980s. They subsequently were divorced, and John conveyed his interest in the property to Mary, subject to the existing financing on the property. She paid for her interest by giving her former husband a deed of trust. Mary died in 1995, and her list of heirs shows two children. There are two judgments docketed in 1987 against one of the children, but he went through bankruptcy in 1990. I was going to write up the report vesting title in the two kids, but the attorney says that John has an unrecorded deed from Mary conveying the property back to him, and I should show him as the owner. What do I do? 

                        - J.R. 

 

Dear J.R.:



You have encountered a situation in which the record title is not complete, and therefore does not, or may not, reflect the actual state of the title. In a prior letter addressed to "W.F." in our Summer, 1995 (Vol. 1, No. 2) issue, I talked about how delivery of the deed was necessary to pass good title. In order to put the world on notice of a transfer, the deed must be recorded, but as between the parties themselves, or anyone claiming through those parties, an unrecorded deed would be sufficient to pass title. That is a matter of contract, as opposed to title. 

Underwriters can read this question. It is not limited to title examiners. 

Since the last recorded deed vests title in the wife, and the wife has died, the record title (or legal title) is in the wife. If she did, in fact, convey the property back to the husband, who neglected to record the deed, the actual title (or equitable title), is in him. You didn't tell me if the deeds of trust are released, and the payment history on those liens since the purported transfer would be of great interest to anyone seeking to prove the transfer did, in fact, occur. 

The husband's reasons for not recording would also be of interest. As Sherlock Holmes might have said, "Watson, there's mischief afoot." If their agreement was merely that he would take over payments while she went through a period of economic hardship, and he extracted the deed from her through economic coercion, the deed could be invalidated. It could amount to simple absent-mindedness. But a number of questions need to be asked by the closing attorney to determine the situation. 

Another issue that will need to be dealt with is that of the liens against one of the children. If title in fact remained with the wife, and her two children inherited the property, the judgment liens would attach to the half interest held by that child. If the bankruptcy was thoroughly done, and these debts listed in the schedules, the judgment debts may have been discharged before the child inherited an interest, and would not attach to the property. There is a Circuit Court case from the Roanoke area, in which an executor was permitted to exercise the power of sale given in a will, but even though the heir was divested of title, judgment liens against the heir attached to the property. Since the purpose of recording a deed is to put the world on notice of the transfer, one of the kid's creditors would argue that their judgment attached to the property since the inheritance was of record before the deed. 

I am assuming these kids are all of legal age (or else they wouldn't have these kinds of money troubles), and it may be that they know about the transfer, and can validate John's story. In such a case, they probably would not be opposed to providing the closing attorney with a quit-claim deed, reciting that no interest in the property descended to them since their mother had conveyed it during her lifetime, but conveying their interests, if any, which were necessary to merge the legal and equitable titles. 

What is really needed on this transaction is a series of instruments which will bring the record title back in line with the actual title. As long as all the parties are in agreement, a quiet title action would be somewhat perfunctory. John would have to record his deed, prove its delivery, and put to rest any theory that title vested in the kids. With such a decree, the judgment creditors would be out of the picture. If the parties are in a hurry, John could record his deed, obtain a quit-claim deed from the kids, and pay off the judgments. This in essence is buying the property over again, but if the children were reasonable, and the debts small, it might be less expensive than attorneys fees and court costs. 

                                                                Tute 



Dear Tute: 

A law firm called our office, and asked us to examine the title to an easement. It had been specifically reserved in a 1964 deed, which referenced a plat showing its location, and conveyed by express reference in the deeds for the benefited property in 1970 and 1994. The purchaser of the burdened property conveyed that property in 1965, by reference to a different plat, and it was conveyed again in 1968 and 1995, again by reference to a different plat. Those deeds contained the usual recital that the conveyance was subject to easements of record, but went on to add a phrase I had not seen before, "which had not been otherwise terminated." The only reason I can think of for the law firm to ask us to examine the easement is because someone is saying it doesn't exist anymore. Does it? 

                        - M.R.A. 


Dear M.R.A.: 

Gee, I don't know. Why don't you drive by the property and look? Seriously, this question is in the same category as J.R.'s question above. To give you a definitive answer requires information which is not in the land records. There is a big difference between whether or not those easement rights are enforceable, and whether or not the easement is valid of record. Given the facts you laid out for me, it appears to be an open and shut case. It is what you and I don't know that will answer your question. 

The owner of the servient property may have blocked off the easement area back in the 1960s. If the owner of the benefited property had other access, or just wasn't using the property, and didn't object, issues like adverse possession come to mind. If there was later provided another means of access to the property, and the owner stopped using the easement, the burdened property owner may be thinking the easement was abandoned since it was no longer necessary. (Incidentally, that is probably a losing theory, since most of the cases Tute has had a chance to read suggest that it takes more than non-use to lead to abandonment of a granted easement.) There may have been an oral agreement between the prior owners, which never got written up and recorded terminating the easement. I could probably go on and on. 

As a title examiner, all you can tell your customer is what the record reveals. From what you have given me, it looks like the record title to the easement is good. What the owner may have done to lose the benefits of that recorded easement are still to be learned. 

                                                                Tute 

 

 

 

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